FP Comment

By Lawrence Solomon

Wind power will require lifestyle change

Electricity consumers in the UK will need to get used to flicking the switch and finding the power unavailable, according to Steve Holliday, CEO of National Grid, the country’s grid operator. Because of a six-fold increase in wind generation, which won’t be available when the wind doesn’t blow, “The grid is going to be a very different system in 2020, 2030,”he told BBC’s Radio 4. “We keep thinking that we want it to be there and provide power when we need it. It’s going to be much smarter than that.

“We are going to change our own behaviour and consume it when it is available and available cheaply.”

Holliday has for several years been predicting that blackouts could become a feature of power systems that replace reliable coal plants with wind turbines in order to meet greenhouse gas targets. Wind-based power systems are necessary to meet the government’s targets, he has explained, but they will require lifestyle changes.

Under the so-called “smart grid” that the UK is developing, the government-regulated utility will be able to decide when and where power should be delivered, to ensure that it meets the highest social purpose. Governments may, for example, decide that the needs of key industries take precedence over others, or that the needs of industry trump that of residential consumers. Governments would also be able to price power prohibitively if it is used for non-essential purposes.

Smart grids are being developed by utilities worldwide to allow the government to control electricity use in the home, down to the individual appliance. Smart grids would monitor the consumption of each appliance and be capable of turning them off if the power is needed elsewhere.

Friday, July 2, 2010

Britain Curbing Airport Growth to Aid Climate

By Elizabeth Rosenthal

July 1, 2010

In a bold if lonely environmental stand, Britain’s coalition government has set out to curb the growth of what has been called “binge flying” by refusing to build new runways around London to accommodate more planes.

Citing the high levels of greenhouse gas emissions from aviation, Prime Minister David Cameron, a Conservative, abruptly canceled longstanding plans to build a third runway at Heathrow Airport in May, just days after his election; he said he would also refuse to approve new runways at Gatwick and Stansted, London’s second-string airports.

The government decided that enabling more flying was incompatible with Britain’s oft-stated goal of curbing emissions. Britons have become accustomed to easy, frequent flying — jetting off to weekend homes in Spain and bachelor parties in Prague — as England has become a hub for low-cost airlines. The country’s 2008 Climate Change Actrequires it to reduce emissions by at least 34 percent by 2020 from levels reached in 1990.

“The emissions were a significant factor” in the decision to cancel the runway-building plans, Teresa Villiers, Britain’s minister of state for transport, said in an interview. “The 220,000 or so flights that might well come with a third runway would make it difficult to meet the targets we’d set for ourselves.” She said that local environmental concerns like noise and pollution around Heathrow also weighed into the decision.

Britain is bucking a global trend. Across North America, Asia and Europe, cities are building new runways or expanding terminals to handle projected growth in air travel and air freight in the hope of remaining competitive.

That growth in traffic has been damped but not halted by hard economic times, and in the current global recession, business concerns have generally prevailed over worries about climate change. In the United States, Chicago-O’Hare, Seattle-Tacoma and Washington-Dulles all opened new runways in 2008.

On Tuesday, Kennedy International Airport in New York reopened its Bay Runway — one of four, and the airport’s longest — after a four-month, $376 million renovation that included the creation of two new taxiways to speed plane movements between runways and terminals.

Airport expansion plans have sometimes been modified or canceled because of concerns about noise or ground-level pollution. But Peder Jensen, a transportation specialist at the European Environment Agency in Copenhagen, said that as far as he knew, Britain “is the only country that had made a conscious decision based on climate considerations.”

Heathrow, one of the world’s busiest airports and a major connection point for destinations in Europe, South Asia and the Middle East, is already notorious for its flight delays and endless lines. It is the only airport of its size with just two runways; Paris-Charles de Gaulle has four and O’Hare has seven.

So even though the Conservative Party had been expressing growing reservations about the planned expansion since 2008, many businessmen were shocked when Mr. Cameron canceled the plan after coming to power in a coalition with Liberal Democrats.

“This is a new government that claimed to be business friendly, but their first move was to eliminate one of the best growth opportunities for London and the U.K. and British companies,” said Steve Lott, a spokesman for the International Air Transport Association. “We’ve run into a shortsighted political decision that will have terrible economic consequences.”

The British government counters that the economic effects of scrapping the third runway are “unclear” while the environmental costs of adding one are unacceptably high. Ms. Villiers said that a high-speed rail network intended to replace short-haul flights would be a better way to address the airport’s congestion than adding a runway.

“We recognized that just putting more flights and more passengers into the skies over southeast England wasn’t worth the environmental costs we’re paying,” she said. “We decided to make Heathrow better rather than bigger.”

Although it is often said that emissions from air travel account for 2 to 3 percent of global emissions, the proportion is higher in many developed countries: emissions from aviation are growing faster there than those from nearly any other sector.

The British government has calculated that aviation emissions accounted for just 6 percent of the country’s carbon dioxide emissions in 2006. But it concluded in a report that aviation could contribute up to a quarter of those emissions by 2030.

In the United States, the number of general aviation hours is forecast to grow an average of 1.8 percent a year, and to be 60 percent greater by 2025 than it is now, according to the Federal Aviation Administration. While airlines have worked hard to improve airplane efficiency, those efforts are dwarfed by the upward trend in flying.

Citizens’ groups in communities near Heathrow fought hard for nearly a decade against the airport’s runway expansion, complaining about noise and nitrous oxide pollution. As climate change became a more potent political issue in Britain several years ago, environmental groups with broader concerns jumped into the fray, camping out at Heathrow and occupying runways at smaller airports, shutting them down for hours.

“If you were a politician, how you felt about the third runway became a test of your commitment to dealing with climate change,” said Ben Stewart, communications director for Greenpeace U.K.

The temptation to expand airports is great for cities in search of new business and tourism. Airports in Europe are now mostly run by private companies, and for them, the more traffic, the more profit.

Some critics say the British government’s principled stand is pointless because airlines and travelers will respond not by forgoing air travel but by flying through a different airport. Instead of emissions being reduced, the critics say, they will simply be transferred to places like Barajas Airport in Madrid or Frankfurt International Airport, which have recently been expanded.

“My personal opinion is that the decision concerning Heathrow’s third runway was highly politicized and outpaced the science of what that runway might or might not do in terms of emissions,” said Christopher Oswald, a vice president of Airports Council International, an industry group. He suggested that a third runway might actually reduce emissions above Heathrow, because with less congestion, planes would spend less time idling on runways or circling in holding patterns.

But Dr. Jensen of the European Environment Agency said that building roads or runways generated more traffic in the long term because greater convenience draws people to a route.

Leo Murray, a spokesman for Plane Stupid, an environmental group that has fought new runways, called the British government’s decision “a turning point for aviation” although he added, “It is uncomfortable to have the coup de grace delivered by the Conservative government.”

China leads global race to make clean energy: Now the world's largest maker of wind turbines, solar panels

As China takes the lead on wind turbines, above, and solar panels, President Barack Obama is calling for American industry to step up.

By Keith Bradsher

New York Times

January 30, 2010

TIANJIN, China - China vaulted past competitors in Denmark, Germany, Spain and the United States last year to become the world’s largest maker of wind turbines, and is poised to expand even further this year.

China has also leapfrogged the West in the last two years to emerge as the world’s largest manufacturer of solar panels. And the country is pushing equally hard to build nuclear reactors and the most efficient types of coal power plants.

These efforts to dominate the global manufacture of renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.

“Most of the energy equipment will carry a brass plate, ‘Made in China,’ ” said K. K. Chan, the chief executive of Nature Elements Capital, a private equity fund in Beijing that focuses on renewable energy.

President Obama, in his State of the Union speech last week, sounded an alarm that the United States was falling behind other countries, especially China, on energy. “I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don’t either,” he told Congress.

Executives expect China to prevail

The United States and other countries are offering incentives to develop their own renewable energy industries, and Mr. Obama called for redoubling American efforts. Yet many Western and Chinese executives expect China to prevail in the energy-technology race.

Multinational corporations are responding to the rapid growth of China’s market by building big, state-of-the-art factories in China. Vestas of Denmark has just erected the world’s biggest wind turbine manufacturing complex here in northeastern China, and transferred the technology to build the latest electronic controls and generators.

“You have to move fast with the market,” said Jens Tommerup, the president of Vestas China. “Nobody has ever seen such fast development in a wind market.”

Renewable energy industries here are adding jobs rapidly, reaching 1.12 million in 2008 and climbing by 100,000 a year, according to the government-backed Chinese Renewable Energy Industries Association.

Yet renewable energy may be doing more for China’s economy than for the environment. Total power generation in China is on track to pass the United States in 2012 — and most of the added capacity will still be from coal.

Largest market for equipment

China intends for wind, solar and biomass energy to represent 8 percent of its electricity generation capacity by 2020. That compares with less than 4 percent now in China and the United States. Coal will still represent two-thirds of China’s capacity in 2020, and nuclear and hydropower most of the rest.

As China seeks to dominate energy-equipment exports, it has the advantage of being the world’s largest market for power equipment. The government spends heavily to upgrade the electricity grid, committing $45 billion in 2009 alone. State-owned banks provide generous financing.

China’s top leaders are intensely focused on energy policy: on Wednesday, the government announced the creation of a National Energy Commission composed of cabinet ministers as a “superministry” led by Prime Minister Wen Jiabao himself.

Regulators have set mandates for power generation companies to use more renewable energy. Generous subsidies for consumers to install their own solar panels or solar water heaters have produced flurries of activity on rooftops across China.

China’s biggest advantage may be its domestic demand for electricity, rising 15 percent a year. To meet demand in the coming decade, according to statistics from the International Energy Agency, China will need to add nearly nine times as much electricity generation capacity as the United States will.

So while Americans are used to thinking of themselves as having the world’s largest market in many industries, China’s market for power equipment dwarfs that of the United States, even though the American market is more mature. That means Chinese producers enjoy enormous efficiencies from large-scale production.

In the United States, power companies frequently face a choice between buying renewable energy equipment or continuing to operate fossil-fuel-fired power plants that have already been built and paid for. In China, power companies have to buy lots of new equipment anyway, and alternative energy, particularly wind and nuclear, is increasingly priced competitively.

Interest rates as low as 2 percent for bank loans — the result of a savings rate of 40 percent and a government policy of steering loans to renewable energy — have also made a big difference.

As in many other industries, China’s low labor costs are an advantage in energy. Although Chinese wages have risen sharply in the last five years, Vestas still pays assembly line workers here only $4,100 a year.

China’s commitment to renewable energy is expensive. Although costs are falling steeply through mass production, wind energy is still 20 to 40 percent more expensive than coal-fired power. Solar power is still at least twice as expensive as coal.

The Chinese government charges a renewable energy fee to all electricity users. The fee increases residential electricity bills by 0.25 percent to 0.4 percent. For industrial users of electricity, the fee doubled in November to roughly 0.8 percent of the electricity bill.

The fee revenue goes to companies that operate the electricity grid, to make up the cost difference between renewable energy and coal-fired power.

Renewable energy fees are not yet high enough to affect China’s competitiveness even in energy-intensive industries, said the chairman of a Chinese industrial company, who asked not to be identified because of the political sensitivity of electricity rates in China.

High transmission losses

Grid operators are unhappy. They are reimbursed for the extra cost of buying renewable energy instead of coal-fired power, but not for the formidable cost of building power lines to wind turbines and other renewable energy producers, many of them in remote, windswept areas. Transmission losses are high for sending power over long distances to cities, and nearly a third of China’s wind turbines are not yet connected to the national grid.

Most of these turbines were built only in the last year, however, and grid construction has not caught up. Under legislation passed by the Chinese legislature on Dec. 26, a grid operator that does not connect a renewable energy operation to the grid must pay that operation twice the value of the electricity that cannot be distributed.

With prices tumbling, China’s wind and solar industries are increasingly looking to sell equipment abroad — and facing complaints by Western companies that they have unfair advantages. When a Chinese company reached a deal in November to supply turbines for a big wind farm in Texas, there were calls in Congress to halt federal spending on imported equipment.

“Every country, including the United States and in Europe, wants a low cost of renewable energy,” said Ma Lingjuan, deputy managing director of China’s renewable energy association. “Now China has reached that level, but it gets criticized by the rest of the world.”

International companies doing business in China say they are being forced to relocate there. Finnish/Dutch ship engine manufacturer Wärtsilä has given in to Chinese pressure and decided to move its production facilities out of the Netherlands.

The move means hundreds of job losses in Wärtsilä’s three Dutch factories. 'No other option' [?????]

Wärtsilä’s Dutch CEO Fred van Beers said earlier this week that the Chinese had left his company with no other option: “They only want to use local manufacturers these days. So if we don’t move to China, they won’t be using us anymore. It’s a tough decision, especially for our employees here in the Netherlands”.

[THIS IS THE TYPICAL GREEDY & FOOLISH MULTINATIONAL CHIEF EXECUTIVE SUITE THINKING, EMBRACED BY EVEN MORE FOOLISH EUROPEAN BUREAUCRATIC BUY-IN, THAT HAS INCREASINGLY RENDERED THE EUROPEANS ALMOST ENTIRELY DEPENDENT ON RUSSIAN OIL & GAS. U.S. MULTINATIONAL CHIEF EXECUTIVE SUITES HAVE BEEN JUST AS FOOLISH & GREEDY WHICH HAS MADE THE U.S. MORE VULNERABLE TO NOT ONLY MIDDLE EASTERN OIL & GAS DEPENDENCY, BUT ALSO CHINESE WINDMILL & SOLAR PANEL DEPENDENCY. WHEN WILL THIS GREEDINESS & FOOLISHNESS END???]

Beijing’s decision that Chinese companies must use only locally produced materials has angered Dutch exporting companies, represented by the EVO organisation. Its spokesman Godfried Smit says China is violating international rules set by the World Trade Organisation (WTO):

“The rules for international trade are clearly spelt out in the WTO hand book. These practices clearly don’t meet the standards set by the WTO”.

Pressure

Mr Smit says this is the reason why the Chinese government is not openly forcing companies to move to China. However, local and regional authorities do press international manufacturers into relocating, EVO claims.

“But it’s difficult to detect, as most companies that have to deal with this kind of pressure rarely speak out. If they do, they fear their access to the Chinese market will be more difficult,” Mr Smit says.

General Motors

Wärtsilä is not the only international company that has to deal with this pressure. General Motors was also forced to move part of its construction capacity to China after it unveiled plans to expand its exports to the region.

'EU should take action'

EVO wants the EU to take action against China on this issue, says Mr Smit. “The EU Commission has a huge influence on the global economy and if it says China is not in line with WTO legislation, China will hopefully listen. The Chinese should also be aware that this might be harmful to themselves. They’ve overcome the image of having an economy that only produces substandard, counterfeited stuff, and they shouldn’t want another negative image”.

China is not the only country putting up trade barriers against the rest of the world - the US and EU have done likewise. “But there’s a difference”, says Mr Smit, “as the EU and US trade barriers are normally in line with WTO guidelines”.

However, in early 2009, the US government came under fire when it unveiled an economic rescue package which stipulated that American investors should use only US-made iron, steel and manufactured goods in projects funded by the package.

US President Barack Obama changed the rules after criticism by the WTO.

Dutch reaction

On Thursday, Dutch deputy minister of economic affairs Frank Heemskerk asked the WTO to take action. “This clearly violates international trade laws. If China is guilty of protectionism, the WTO should act”, he said.

[IT IS QUITE DISTURBING THAT THE ITSSD AND OTHER INFORMED PROFESSIONALS HAD PREVIOUSLY PREDICTED THIS OUTCOME FIVE YEARS AGO IN ITS GLOBALLY RECOGNIZED ARTICLE APPEARING IN THE INTERNATIONAL JOURNAL OF ECONOMIC DEVELOPMENT. UNFORTUNATELY, GREEDY & FOOLISH MULTINATIONAL CHIEF EXECUTIVES, BELIEVING THEY KNEW BETTER, IGNORED THESE CLEAR WARNINGS, AND INCOMPETENT AND FINANCIALLY INCENTIVIZED (LOBBIED) CONGRESSIONAL REPRESENTATIVES MADE IT EVEN EASIER TO TRANSFER HIGHLY SENSITIVE, PROPRIETARY AND COMPETITIVE TECHNOLOGIES TO CHINESE COMPANIES, AND BY EXTENSION, CHINESE GOVERNMENT AGENCIES THAT ARE NOW USING SUCH TECHNOLOGIES AGAINST U.S. NATIONAL SECURITY INTERESTS THROUGHOUT THE WORLD. ALSO, THESE COMPANIES HAVE GIVEN UP THOUSANDS UPON THOUSANDS OF U.S. JOBS AND MANUFACTURING EXPERTISE. SHAME ON THE U.S. CEOS FOR PURSUING THIS APPROACH; AND SHAME ON THE U.S. CONGRESS FOR ALLOWING IT TO HAPPEN.]

China has employed a perceptibly more attractive multi-level strategy that has enabled it to progress along the economic ladder much more rapidly than its industrial predecessors.505 As a result, it has become, for the moment, the 'factory of the world', as well as a future aspiring technology leader.506 China‘s strategy differs markedly from Japan‘s strategy insofar as, it was necessitated by a simultaneous need for development, skilled labor, technology, and investment.507 Although China has utilized practically every device in the opportunist‘s toolbox,508 its conduct has remained more palatable to developed nation industries. Apparently, China has learned to frame its innovation needs in terms acceptable to the marketplace.509 510 511 China has largely premised its model of innovation and development on the mechanism of joint venture-based investment.

Typically, a foreign investor contributes intellectual property, including manufacturing process know-how and overseas distribution in exchange for a Chinese company‘s contribution of local manufacturing plant and equipment plus an unlimited supply of low-wage skilled labor. Incremental technology improvements and any new patents, trademarks and copyrights inure to the benefit of the new enterprise. Joint venture-based products are usually subject to export and substantially banned from the domestic Chinese market, which is largely reserved for Chinese state-owned or private enterprises.512 513 514 The Chinese government has documented the massive extent of foreign technology transfer that has already occurred. In 2001 alone, the government approved 240,000 joint venture technology transfer contracts, worth approximately $10 billion, reflecting a 23% increase from the prior year (2000).515

In addition to recognizing how it could capitalize on its seemingly endless supply of cheap labor, China has also sought to develop indigenous human capital (labor skills) which it deems essential to innovation. The Chinese government obviously knows that intellectual property-based innovation is the key to technological advancement. In this regard, China has employed a global ‘charm offensive’ that has sought to “persuade, lure and sometimes force foreign corporations to locate their most advanced research and developm ent facilities in China”. It has also sent its students abroad to advanced western universities to become educated, with the expectation that they will eventually return.516

In order to keep its factories running and its labor pool content China has sought to control the mass wholesalers and retailers upon which most global end-use consumers depend for their daily purchases. To accomplish this, however, China has had to develop the ability to efficiently: 1) import large quantities of raw materials; 2) build and operate large manufacturing and processing facilities that convert those materials into useable intermediate and/or finished goods; and 3) export large quantities of finished products to consumers. This has required that it quickly learn all about global procurement and distribution systems. Consequently, when a western company decides to move its R & D operations to China to capitalize on China‘s relatively cheap labor and very well educated knowledge pool, it is unwittingly transferring its next generation of knowledge and innovations there,517 and helping China to become an independent innovative as well as manufacturing force. 518 519 520

Corresponding Endnotes:

505 “China is using its unprecedented access to so m e of the world‘s most advanced technology as a means of leapfrogging into the modern industrial age. China has been able to use this technology to upgrade its industries and to become globally competitive in a short span of time… [Through the] process of absorbing [foreign] technology and using it to compete with the technology‘s original owners and creators…China‘s goal is to become competitive and to dominate all industries. While China already dominates in some low-technology sectors, China‘s goal is to dominate not only in low-technology sectors, but also in high-technology sectors. Unlike Japan or Korea, China does not intend to abandon lower-level technology sectors as it moves up the technology ladder.” See Counterfeiting and China‘s Economic Development, Written Testimony of Professor Daniel C.K. Chow, at p. 3, Before the U.S.-China Economic and Security Review Commission, Hearing on Intellectual Property Rights Issues and Imported Counterfeit Goods (June 7-8, 2006).

506 “With its joint venture model, the Chinese government has moved its industrial infrastructure from the nineteenth century to the twenty-first century in less than two decades. In the process, China is getting the kno w ledge and capacity it needs to become the world’s manufacturing center.” See Pat Choate, HOT PROPERTY: The Stealing of Ideas in an Age of Globalization, at p. 172.

507 “China needs jobs. To get those jobs, China needs foreign technology. To get the foreign technology, China needs foreign investment. To get the foreign investment, the Chinese government has introduced a host of national development initiatives. Each is built on a grand four-part long-term development strategy.” Ibid., at p. 170.

508 “For those companies that do decide to do business in China, the unfortunate reality is that they all must expect intellectual problems eventually. The problem may originate from suppliers or other Chinese manufacturer. It may come from former employees. It may even come from state-sponsored reverse-engineering programs. In March [2006], China’s railway ministry proudly announced two new, high -speed railway lines. Government officials announced that the new railways would use only Chinese technology. How did China achieve this Great Leap Forward in transportation technology? Railroad minister Liu Zhijun explained it to the Chinese press: ‘Our technology is a re-innovation on the basis of assimilating advanced technologies of foreign countries.‘ Re-innovation’, whether by the state or by other local businesses, is a fact of life in today’s China’” (emphasis added). SeeTestimony of the Honorable Dave McCurdy, President and CEO, Electronic Industries Alliance, before the U.S.-China Economic & Security Review Commission Hearing on China‘s Enforcement of Intellectual Property Rights and the Dangers of the Movement of Counterfeited and Pirated Goods into the United States at p. 4 (June 7 - 8, 2006).

509 “Just like the United States and Japan before it, China is using all the usual means – licensing, theft, piracy, intimidation, spies, and cooperation – to get the technology it needs. China has also adopted a system of joint venture, an old and established tool for securing foreign intellectual property, and has elevated it to an art form. With joint ventures, China reduces its need to steal or expropriate foreign intellectual property because foreign corporations share it as a condition of doing business there… In 2002, economists at Lehman Brothers… projected that China would have the world ‘s second largest economy by 2030. But that projection will not be realized unless China can continue to: a. [G]et the basic foreign technology; b. [C]reate the capacity to develop proprietary technology domestically; and c. [C]ontrol these core technologies world wide.” Ibid., at pp. 170 and 172.

510 “For decades China has been targeting Western technologies, initially seeking military and other secrets, but more recently concentrating much of its effort on technologies and intellectual property designed to drive its rapidly expanding economy…Thousands of American companies are among those attracted b y China’s cheap labor and growing market for consumer goods. Based on population, China’s market is three times larger than the European Union and four times the size of the United States. It economy is growing at an average of 8 percent a year. Many of the products are particularly vulnerable to reverse engineering, design infringement, and counterfeiting due to inadequate protections in China of intellectual property rights… It has been said that the right to counterfeit goods is engrained in China’s culture. Former premier Deng Xiaoping promoted the philosophy of: ‘Let foreign things serve China.’ This perspective continues today and China generally views counterfeiting and other violations of intellectual property not as a serious offense, but as a major source of income, taxes, and employment.” See The Developing U.S.-China Relationship: Analysis of China’s Weak Intellectual Property Rights Protection and Enforcement, Written Testimony of Dr. Neil C. Livingstone, at pp. 1-2, Before the U.S.-China Economic and Security Review Commission, Hearing on Intellectual Property Rights Issues and Imported Counterfeit Goods (June 7-8, 2006).

511 “China is now our third -largest trading partner. Last year American firms exported $42 billion in goods and services to China, and exports rose 40% in the first quarter of this year, with high-tech products such as medical and scientific equipment and semiconductors among the fastest-rising major products… We have seen some small indications that the Chinese government is taking intellectual property more seriously. There has been progress – a very tiny amount – but not nearly enough. The truth is that China has no strong tradition of protecting intellectual property rights. Until it does, the abundant rewards of trade with China will always be tempered by equally abundant risks. The concerted effort begun by the Chinese government in recent months to encourage homegrown innovation and lessen the country‘s economic development reliance on imported technology is in some ways a double-edged sword. On the one hand, it is encouraging that the government wants China to develop its own commercial technologies, because the most effective way to foster true enforcement of IPR protection is for domestic entrepreneurs and small businesses to have a real stake in the system. It is impossible for someone to take enforcement seriously if they have nothing of their own to protect. Encouraging innovation rather than mandating technology and standards is a definite step in the right direction of lowering non-tariff trade barriers… As a new market and an ever more important trading partner, China holds great promise. But there are still many challenges that U.S. companies face in doing business there. Sometimes the opportunities outweigh the risks; other times, firms run into serious trouble in China. In every case, the Chinese market will never meet its full potential until it is governed by a sound and transparent legal system, particularly in terms of intellectual property rights.” See Testimony of the Honorable Dave McCurdy, President and CEO, Electronic Industries Alliance, before the U.S.-China Economic & Security Review Commission Hearing on China’s Enforcement of Intellectual Property Rights and the Dangers of the Movement o f Counterfeited and Pirated Goods into the United States supra, at pp. 1 and 4.

512 “The foreign investor puts up the capital, patents, copyrights, trademarks, know-how, and overseas distribution. In most circumstances, the local Chinese partner keeps half the equity in the new enterprise. Any improvements in technology and any new patents, trademarks, or copyrights developed in China by the joint venture belong to the new enterprise. In exchange, China contributes an unlimited supply of low-wage, competent, compliant workers. The foreign corporations are allowed to serve their markets from Chinese-based factories that operate under the most limited public regulation of labor, production, pollution, and health and safety standards. Products from these ventures are often banned in China, leaving that market to state or locally-owned enterprises. Despite China’s invitation to foreign companies to come and invest, the Chinese government has reserved entire sectors of its economy for state-owned enterprises. Other sectors belong to China’s private entrepreneurs. Foreign investors can participate in the rest on terms that China dictates. See Pat Choate, HOT PROPERTY: The Stealing of Ideas in an Age of Globalization, at p. 178. Foreign corporations also use local managers and engineers to operate their factories, teach the Chinese how to apply their technology, and follow the government’s economic dictates. Through this, China gains know-how quickly.” Ibid., at p. 172. “…As foreign companies become increasingly dependent on Chinese manufacturing for their worldwide production, they will come under correspondingly more pressure to make available and then share ownership of their foreign distribution systems. Eventually, just as the Japanese and Koreans did, the Chinese will establish brand trademarks that become known worldwide, which they will sell through these joint distribution networks. Finally, the Chinese, just like the Japanese before them, will no longer need foreign corporations or their networks.” Ibid., at p. 183.

513 “…[T]he [Electronic Industries Alliance] EIA published in April [2006] a best practices guide entitled Protecting Intellectual Property Rights in China and sent it to senior executives at each of our nearly 1,300 member companies. The guide was a collaboration between EIA and the China Alliance, which is a partnership of four North American law firms…with a collective team of legal experts on China… I think the most important message of the guide… is that in many ways there are no markets in China” (italicized emphasis in original) (boldface emphasis added). See Testimony of the Honorable Dave McCurdy, President and CEO, Electronic Industries Alliance, before the U.S.-China Economic & Security Review Commission Hearing on China’s Enforcement of Intellectual Property Rights and the Dangers of the Movement of Counterfeited and Pirated Goods into the United States at pp. 3 -4, supra.

515 See Pat Choate, HOT PROPERTY: The Stealing of Ideas in an Age of Globalization,, at p. 174.

516 “China offers more than an enormous pool of cheap labor light manufacturing. It has a large pool of engineers and technicians available for more advanced work, many educated in the United States. The Chinese Academy of Engineering reports that as of the late 1990‘s China had more than 2.1 million trained engineers, including 600,000 senior-level people. This is a significant reservoir of technical talent. Most of these engineers are available at roughly 10 percent of the salaries of their American, Japanese, or European counterparts.” Ibid., at p. 173.

517 “Angela Merkel, German chancellor, will…urge China to drop rules that force foreign companies to transfer proprietary technologies and designs to Chinese competitors. These ‘forced transfers’ top a list of complaints that German business has asked Ms. Merkel to raise with Wen Jiabao, the Chinese premier, during her first visit to Beijing. The complaints, to be published today [May 22, 2006] by BDI, the industry federation, include the difficulties foreign companies face in obtaining redress before Chinese courts in intellectual property infringement cases.” See Bertrand Benoit, Merkel To Grill China On ‘Forced Transfers’, Financial Times (5 /22/06) at p.1.

518 See Pat Choate, HOT PROPERTY: The Stealing of Ideas in an Age of Globalization,, at pp. 171-172. “China is developing its capacity to import raw materials and export finished goods. COSCO, the Chinese state-owned shipping company is now working with port authorities on both the west and east coasts of the United States to expand their capacity to handle far greater imports and exports with China. In 2002…COSCO opened a route to Boston. Within one year, the volume of goods shipped from the Boston port to Asia doubled, while the import volume from Asia to Boston increased fourfold. Equally significant, China has replaced the United States as the transport manager for the Panama Canal. The governments of Panama and China have had extensive negotiations on the construction of new locks for the canal, sufficient to carry the giant cargo ships that China envisions for the future. China is ensuring that it w ill be able to get the world’s raw materials to its factories and its finished goods to world markets. China will eventually try to control the principal retail outlets that market its products in other nations. China’s growing monopoly on the manufacture of goods that foreign retailers sell provides the business advantage required in such negotiations and takeovers. Viewed from China’s perspective, as the products it makes come to dominate U.S. and other markets, why should not the Chinese share in the profits made by Wal-Mart, Kmart, JCPenney, and other retailers that sell its good, or even take them all if it can? This is the way capitalism works.” Ibid.

519 There is actual anecdotal evidence that China’s domestic propaganda machine promotes industrial stealth of foreign technologies by warning local industries that the Chinese government’s protection of foreign intellectual property rights, if permitted, would lead to foreign company monopolies in China. “On one of my trips to China, I had the chance to sit in on a speech made by a local Qingdao official of the State Intellectual Property Office. Since he was speaking to an auditorium of local businessmen and Chinese government officials, perhaps, I should have expected the candor with which he spoke, but my jaw dropped when I heard off-message rhetoric that enforcement of trademark, patent and copyright laws could lead to monopolies by foreign multinationals, that different economic development levels call for different standards of enforcement, and that better enforcement could not come at the expense of domestic innovators. That is not the language we hear from Vice Minister Wu Yi and other Beijing officials working to improve China’s record.” See Testimony of the Honorable Dave McCurdy, President and CEO, Electronic Industries Alliance, before the U.S.-China Economic & Security Review Commission Hearing on China’s Enforcement of Intellectual Property Rights and the Dangers of the Movement of Counterfeited and Pirated Goods into the United States at p. 5. supra.

520 Some experts believe that China’s IPR violation conundrum is caused not by the attitude of Chinese officials, but rather by limitations on state capacity. ―It is m y considered opinion that the majority of Beijing‘s elite decision makers genuinely believes in the importance of protecting intellectual property rights, even if it is for nationalistic or other self-interested reasons (i.e., economic growth, the strategic payoffs form a vibrant innovative – and protected – knowledge base, etc.). Insofar as this problem persists, much of the reason is due to limitations on state capacity: China’s top leadership can only expend the necessary resources to sustain two or three major campaigns over the long term. That explains the paradox of why China can regulate the most intimate behavior of 1.3 billion people through its stringent population control policy but cannot crackdown in a sustained manner on a problem as seemingly straightforward and obvious as copyright piracy” (emphasis added). See Andrew C. Mertha, Testimony to the US-China Economic and Security Review Commission, Hearing on Intellectual Property Rights Issues and Imported Counterfeited Goods (June 8, 2006), at p. 1.

Here's another: If a doctrine falls, will enough believers admit they were wrong and withdraw support for policies associated with it?

The "doctrine" of global warming, now euphemistically called "climate change," suffered a severe blow last week as much of Europe was buried in record amounts of snow and subfreezing temperatures.

"Experts" who believe in global warming, uh climate change, went on television where they bravely tried to make a distinction between weather, which they said was about what happens today, and climate, which is long term. Most of it fell on deaf -- and cold -- ears as growing numbers disbelieve the "experts," relying more on their own "lying eyes."

Writing Sunday in London's Daily Mail, columnist David Rose analyzed recent scientific data amassed by eminent climate scientists. Rose says that far from a warming planet, "the bitter weather afflicting much of the Northern Hemisphere is only the start of a global trend towards cooler weather that is likely to last for 20 or 30 years."

Rose cites data from the U.S. National Snow and Ice Data Center in Colorado, which found that, "Arctic summer sea ice has increased by 409,000 square miles, or 26 percent, since 2007."

This, he says, challenges "some of the global warming orthodoxy's most deeply cherished beliefs, such as their claim that the North Pole will be free of ice by the summer of 2013."

During last month's climate summit in Copenhagen, more than 150 scientists with backgrounds in climate science wrote an open letter to U.N. Secretary-General Ban Ki-moon, a global warming believer.

The letter begins,"climate change science is in a period of 'negative discovery' - the more we learn about this exceptionally complex and rapidly evolving field the more we realize how little we know. Truly the science is not settled."

The scientists challenge 10 of the main claims of the global warming-climate change true believers and write,"... there is no sound reason to impose expensive and restrictive public policy decisions on the peoples of the Earth without first providing convincing evidence that human activities are causing dangerous climate change beyond that resulting from natural causes.

"Before any precipitate action is taken, we must have solid observational data that recent changes in climate differ substantially from changes observed in the past and are well in excess of normal variations caused by solar cycles, ocean currents, changes in the Earth's orbital parameters and other natural phenomena."

That seems more than reasonable, but politicians in Europe and America want to rush through additional restrictions on how we live in order to seize more power. This is the major reason for their panic attack.

As new scientific evidence adds to the body of information, history and common sense, the power grab by the politicians is in peril. The hurry-up offense, to employ a football term, is being used to rush through legislation before the defense can devise an effective response. But the defense is now on the offense, and the offense is being forced to poorly play defense.

Should we do nothing about our consumption of petroleum? No, we should use this window of opportunity to decrease our reliance on petroleum; not because of "climate change," but to deprive the oil-producing nations of money too many of them use to underwrite terrorism.

This should satisfy both the global warming disciples and deniers and make America and Europe less dependent on nations that wish to destroy our liberty. But threats to liberty are not limited to some oil-producing nations; they can also be found in the British Parliament and in the American Congress.

The falling doctrines now make so much noise that only those without hearing fail to notice.

Global warming does not worry China, a fact that partially accounts for Chinese Premier Wen Jiabao's shabby treatment of President Obama at the Copenhagen climate conference last month.

In an opinion column in Britain's Guardian newspaper, one insider was quoted as saying, "The truth is this: China wrecked the [Copenhagen] talks; intentionally humiliated Barack Obama; and insisted on an awful 'deal' so western leaders would walk away carrying the blame."

Mr. Obama would have seen it coming if his intelligence briefers had read the Chinese newspapers. After all, details of China's harsh negotiating stance on climate change were published on the front page of Beijing's Science Times on Sept. 7, 2009, in a lengthy article by China's top expert in paleoclimatology, Ding Zhongli.

The article was significant not only because Mr. Ding is China's most prestigious geophysicist, but also because he is vice president of the Chinese Academy of Sciences, a post that makes him the final word on climate science for the Chinese Communist Party. Mr. Ding's views substantially shaped China's policies at the conference.

American politicians would be wise to remember that, while there may be a "robust" (but not unanimous) consensus among American scientists that human-source carbon dioxide emissions are the major cause of global warming, there is no such view in China. Indeed, so far as Mr. Ding is aware, "the idea that there is a significant correlation between temperature increases and concentrations of atmospheric carbon dioxide lacks reliable evidence in science." Instead, Mr. Ding avers, "if it is just as geophysicists believe: global temperature change is related to solar activity … then human activity is not the only cause."

So why the controversy? Last August, Mr. Ding published a study of historical carbon emission statistics from various nations around the world and drew this unremarkable correlation: the more energy a nation generated by burning fossil fuels, the more rapidly its economy grew. Being a politician as well as a scientist — he is vice chairman of the communist-run Democratic Alliance — he grasped its propaganda value.

Mr. Ding now purports to be upset that "developed nations" of the West, after emitting carbon gases into the atmosphere for over a century, suddenly insist that poor "developing" nations — including China — now share the burden of mitigating "predicted dire consequences" of global warming. He deduces that the secret motive for the climate controversy among the Western powers "is to restrain the growth of the developing nations and to preserve their own preferential position."

Science Times opined: "Data calculated and provided by Mr. Ding's Research Task Force lets us see quite clearly the hidden murderous intentions of some countries."

At the negotiating table in Copenhagen, Science Times concluded, China must go on the offensive against those countries to protect its "right to develop."

China's negotiating strategy, explained Science Times, is based firmly on two key concepts: "per capita emissions" within an "historical context." That is, each Chinese citizen has the right to generate carbon emissions equal to any other single person on the planet; and those emissions must be considered over the historical timeline of 1900-2050, with national emission quotas calculated only on the basis of accumulated per capita carbon generation from 1900 to 2005.

This was precisely China's position at Copenhagen: China demanded that the United States, Europe and Japan cut carbon emissions immediately and continue reductions over the next 40 years, while China — and any other "developing" country — may continue to increase emissions until such time as they reach the total 150-year "per capita aggregate" that the Western citizens — both dead and alive — have enjoyed thus far.

All this illuminates the broader propaganda and competitive trade aspects of China's climate change strategy. Given the deep skepticism of the Chinese Academy of Science's top climatologist and the prominence accorded his views in the Academy's publications, it is clear that no one in the Chinese Politburo is truly anxious about the climatic consequences of global warming.

This is not to say China intends to ignore the issue. Far from it. China intends to keep on gaming the Kyoto Protocol's "Clean Development Mechanism" (CDM) scheme under which the wealthy nations pay the "developing" nations, including China, for reductions in predicted growth of carbon emissions. China is already the biggest beneficiary of the CDM's carbon credits. Yet Beijing is adamant that the developed countries refrain from "carbon taxes" on their imports of China's "high-carbon" manufactured goods.

The Chinese government is also eager to dominate world markets for alternative energy technologies like wind power, solar panels and high-power batteries by subsidizing Chinese factories that are in competition with German, Japanese, Spanish and American producers. And at Copenhagen, the United States apparently agreed to help raise $100 billion over the next decade to help "developing countries" — apparently including China — in their "common but differentiated responsibilities" to reduce greenhouse gas emissions.

Mr. Obama's hearty embrace of China's transparently meaningless "commitment" to reduce its "carbon intensity" by the year 2020 is a leading indicator of the administration's willingness to play along with China's nonsense. "Carbon intensity" is, after all, the proportion of carbon emissions per unit of GDP, and if China's GDP continues to grow as it has for the past 30 years — in double digits — China's absolute carbon emissions will grow dramatically. China wins either way. If global warming becomes catastrophic by 2050, China will have continued its economic development unabated and will blame the West; if global warming turns out not so bad, China's competitors in the West will have hobbled themselves irreparably. For these reasons, it is easy to discern China's fingerprints all over the international climate change fiasco.

• John J. Tkacik Jr., a retired Foreign Service officer, was chief of China analysis in the State Department's Bureau of Intelligence and Research during the Clinton administration.

Prof. Ding, a Quaternary geologist, was born in Shengzhou, Zhejiang Province in 1957. He graduated in 1982 from the Department of Geology, Zhejiang University, and obtained his Ph.D. degree from the CAS Institute of Geology (the predecessor of today's CAS Institute of Geology and Geophysics, IGGCAS) in 1988. Prof. Ding served as director of IGGCAS from 2000 to 2007. He was elected a CAS Member in 2005, and Chairman of the Chinese National Committee for the International Geosphere-Biosphere Program (CNC-IGBP) in 2008.

For the past two decades, Prof. DING focused his research on the Quaternary climate change and associated forcing mechanisms, and made a systematic observation and pedostratigraphic correlation of the loess sequences over the Chinese Loess Plateau, laying a fundamental basis for later studies. For the first time he established a 2.6-Ma orbital timescale of stacked grain-size record for Chinese loess that is highly compatible with marine isotope record. He found that the East-Asian winter monsoon intensity registered in the loess grain-size was in phase with Milankovitch cycles, particularly the 100 ka eccentricity cycle, and that the winter monsoon intensity is closely related to global ice volume changes. His achievements and many innovative results have been published in numerous highly-ranked international journals and are widely cited. He has also contributed to textbooks that have been published in America and England. He has been awarded many prizes, including CAS Award for Nature Sciences and the Achievements Prize from the Ho Leung Ho Lee Foundation.

Copenhagen was a disaster. That much is agreed. But the truth about what actually happened is in danger of being lost amid the spin and inevitable mutual recriminations. The truth is this: China wrecked the talks, intentionally humiliated Barack Obama, and insisted on an awful "deal" so western leaders would walk away carrying the blame. How do I know this? Because I was in the room and saw it happen.

China's strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world's poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait. The failure was "the inevitable result of rich countries refusing adequately and fairly to shoulder their overwhelming responsibility", said Christian Aid. "Rich countries have bullied developing nations," fumed Friends of the Earth International.

All very predictable, but the complete opposite of the truth. Even George Monbiot, writing in yesterday's Guardian, made the mistake of singly blaming Obama. But I saw Obama fighting desperately to salvage a deal, and the Chinese delegate saying "no", over and over again. Monbiot even approvingly quoted the Sudanese delegate Lumumba Di-Aping, who denounced the Copenhagen accord as "a suicide pact, an incineration pact, in order to maintain the economic dominance of a few countries".

Sudan behaves at the talks as a puppet of China; one of a number of countries that relieves the Chinese delegation of having to fight its battles in open sessions. It was a perfect stitch-up. China gutted the deal behind the scenes, and then left its proxies to savage it in public.

Here's what actually went on late last Friday night, as heads of state from two dozen countries met behind closed doors. Obama was at the table for several hours, sitting between Gordon Brown and the Ethiopian prime minister, Meles Zenawi. The Danish prime minister chaired, and on his right sat Ban Ki-moon, secretary-general of the UN. Probably only about 50 or 60 people, including the heads of state, were in the room. I was attached to one of the delegations, whose head of state was also present for most of the time.

What I saw was profoundly shocking. The Chinese premier, Wen Jinbao, did not deign to attend the meetings personally, instead sending a second-tier official in the country's foreign ministry to sit opposite Obama himself. The diplomatic snub was obvious and brutal, as was the practical implication: several times during the session, the world's most powerful heads of state were forced to wait around as the Chinese delegate went off to make telephone calls to his "superiors".

Shifting the blame

To those who would blame Obama and rich countries in general, know this: it was China's representative who insisted that industrialised country targets, previously agreed as an 80% cut by 2050, be taken out of the deal. "Why can't we even mention our own targets?" demanded a furious Angela Merkel. Australia's prime minister, Kevin Rudd, was annoyed enough to bang his microphone. Brazil's representative too pointed out the illogicality of China's position. Why should rich countries not announce even this unilateral cut? The Chinese delegate said no, and I watched, aghast, as Merkel threw up her hands in despair and conceded the point. Now we know why – because China bet, correctly, that Obama would get the blame for the Copenhagen accord's lack of ambition.

China, backed at times by India, then proceeded to take out all the numbers that mattered. A 2020 peaking year in global emissions, essential to restrain temperatures to 2C, was removed and replaced by woolly language suggesting that emissions should peak "as soon as possible". The long-term target, of global 50% cuts by 2050, was also excised. No one else, perhaps with the exceptions of India and Saudi Arabia, wanted this to happen. I am certain that had the Chinese not been in the room, we would have left Copenhagen with a deal that had environmentalists popping champagne corks popping in every corner of the world.

Strong position

So how did China manage to pull off this coup? First, it was in an extremely strong negotiating position. China didn't need a deal. As one developing country foreign minister said to me: "The Athenians had nothing to offer to the Spartans." On the other hand, western leaders in particular – but also presidents Lula of Brazil, Zuma of South Africa, Calderón of Mexico and many others – were desperate for a positive outcome. Obama needed a strong deal perhaps more than anyone. The US had confirmed the offer of $100bn to developing countries for adaptation, put serious cuts on the table for the first time (17% below 2005 levels by 2020), and was obviously prepared to up its offer.

Above all, Obama needed to be able to demonstrate to the Senate that he could deliver China in any global climate regulation framework, so conservative senators could not argue that US carbon cuts would further advantage Chinese industry. With midterm elections looming, Obama and his staff also knew that Copenhagen would be probably their only opportunity to go to climate change talks with a strong mandate.

This further strengthened China's negotiating hand, as did the complete lack of civil society political pressure on either China or India. Campaign groups never blame developing countries for failure; this is an iron rule that is never broken. The Indians, in particular, have become past masters at co-opting the language of equity ("equal rights to the atmosphere") in the service of planetary suicide – and leftish campaigners and commentators are hoist with their own petard.

With the deal gutted, the heads of state session concluded with a final battle as the Chinese delegate insisted on removing the 1.5C target so beloved of the small island states and low-lying nations who have most to lose from rising seas. President Nasheed of the Maldives, supported by Brown, fought valiantly to save this crucial number. "How can you ask my country to go extinct?" demanded Nasheed. The Chinese delegate feigned great offence – and the number stayed, but surrounded by language which makes it all but meaningless. The deed was done.

China's game

All this raises the question: what is China's game? Why did China, in the words of a UK-based analyst who also spent hours in heads of state meetings, "not only reject targets for itself, but also refuse to allow any other country to take on binding targets?" The analyst, who has attended climate conferences for more than 15 years, concludes that China wants to weaken the climate regulation regime now "in order to avoid the risk that it might be called on to be more ambitious in a few years' time".

This does not mean China is not serious about global warming. It is strong in both the wind and solar industries. But China's growth, and growing global political and economic dominance, is based largely on cheap coal. China knows it is becoming an uncontested superpower; indeed its newfound muscular confidence was on striking display in Copenhagen. Its coal-based economy doubles every decade, and its power increases commensurately. Its leadership will not alter this magic formula unless they absolutely have to.

Copenhagen was much worse than just another bad deal, because it illustrated a profound shift in global geopolitics. This is fast becoming China's century, yet its leadership has displayed that multilateral environmental governance is not only not a priority, but is viewed as a hindrance to the new superpower's freedom of action. I left Copenhagen more despondent than I have felt in a long time. After all the hope and all the hype, the mobilisation of thousands, a wave of optimism crashed against the rock of global power politics, fell back, and drained away.

Meet ITSSD Advisory Board Member Sorin Straja, PhD.

Sorin Straja is currently, Vice President for Science and Technology of the Institute for Regulatory Science (RSI) and Chief Financial Engineer with Montgomery Investment Technology, Inc (MITI). He has over 25 years of expertise in mathematical modeling and software development as applied in engineering and risk assessment. Dr. Straja served as Principal Technical Secretary for peer review activities at RSI and to numerous Review Panels established by the American Society of Mechanical Engineers (ASME) to review a significant number of projects supported by the U.S. Department of Energy.

About ITSSD

ITSSD, The Institute for Trade, Standards, and Sustainable Development, Inc. is an independent, not-for-profit, non-partisan educational organization dedicated to the promotion of a positive paradigm of sustainable development consistent with private property, free market and WTO Rule Of Law-based principles. The ITSSD examines evolving international law and policy as it relates to trade, science, technology and sustainable economic freedom and development around the world.
The charitable mission of the ITSSD and its Advisory Board is further explained at: http://www.itssd.org/mission.htm and at: http://www.itssd.org/board.htm .

Followers

Subscribe Now: Feed Icon

Fair Use of Copyrighted Materials Notice

This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of legal, economic, scientific, technology, political and social issues, etc. This use constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.